FUTURE BIOFUELS

Biofuels 2010: Spotting the Next Wave
Joshua Kagan and Travis Bradford, December 7, 2009 (Prometheus Institute/GTM Research)

SUMMARY
For at least 2 decades, so many have invested so much in the dream of growing an oil substitute. Yet efforts so far have worked out very like that dreaming feeling in which the harder the striving, the more the objective recedes.

Despite Herculean efforts by political leaders to subsidize AGROfuel development (see Ethanol’s Federal Subsidy Grab Leaves Little For Solar, Wind And Geothermal Energy) and ceaseless ingenuity by laboratory scientists and chemical engineers to streamline AGROfuel processing, first-generation field-grown liquid fuels, especially grain and sugar ethanols and oilseed biodiesels, have proven counterproductive. They cost too much to grow and refine and the full production processes generate more greenhouse gas emissions than they save.

Despite enormous amounts of money poured into research and development, a way to economically produce second-generation (non-crop) biofuels at commercial scale has eluded the most ambitiously dedicated lab scientists and the entrepreneurs who have sponsored them.

Is the dream, especially the dream without the harsh reality of government subsidies, dead? In Biofuels 2010: Spotting The Next Wave, Joshua Kagan and Travis Bradford of the Prometheus Institute say the world's drivers may be about to awaken to see the attainment of the dreamers' wildest imaginings.

U.S. New Energy subsidies through 2009 (click to enlarge)

The researchers began with 3 fundamental questions:
(1) What are the different types of biofuels and which are worth more effort?
(2) If any biofuel will ever be able to compete in the liquid fuel marketplace without subsidies, when?
(3) If any biofuel can be a petroleum substitute, when will it achieve commercial scale capacities?

They looked at 40+ first-, second- and third-generation biofuels producers, studying 5 key factors: (1) local and world market dynamics, (2) technologies, (3) policies and how they have or might impact the market, (4) feedstocks, and (5) the economics of current and coming options.

Their conclusion is that the biofuels paradigm is poised for a shift. Second-generation cellulosic (non-crop) ethanol is likely to become a reality by 2011, though its success will be limited. Third-generation technological biofuels, especially algae-based biofuels, will – if producers achieve the advances predicted for algae – “almost certainly” become price competitive with petroleum-based liquid fuels WITHOUT SUBSIDIES by about 2016 and thereby revolutionize the biofuels industry.

A crucial aside: Because there is much made of algae’s voracious consumption of carbon dioxide (CO2), some climate change activists have attacked hopes for it. They want to squelch the belief it is an answer to the problem of greenhouse gas emissions. Algae, they are right, are not the answer to the world’s worsening challenges from the burning of fossil fuels. Algae are simply the most efficient and least harmful sources of jet and heavy transportation liquid fuels. They are certainly not an excuse to go on burning coal.

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COMMENTARY
At present, first-generation AGROfuels, grain- and sucrose-based ethanol and oil seed-based biodiesel, are the only commercially available products. In 2008, 21.5 billion gallons of biofuel was produced. 17.3 billion gallons (80%) of it was those ethanols. It replaced 3.7% of the world’s gasoline use. The other 20% of the AGROfuels (4.1 billion gallons) was those biodiesels. It displaced 1.5% of the world’s use of diesel fuel.

To replace that small amount of liquid petroleum products, an enormous amount of cropland was used, putting a severe upward pressure on food prices. The U.S., the world’s biggest corn producer, used 33% of its corn crop to meet ~5% its gasoline needs in 2008. The same year, the EU supplied 3% of its diesel fuel by using ~60% of its rapeseed harvest. In South America and Indonesia, efforts to replace cropland used for liquid AGROfuel production forced incursions into precious old-growth rainforests, doing irreparable environmental harm and aggravating global climate change.

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These facts explain policymakers’ and entrepreneurs’ great excitement over hopes for “advanced” second-generation biofuels refined from non-crop cellulosic materials. Their ambitions will likely be realized by 2011. But research suggests non-crop cellulosic feedstocks will be limited by many as yet barely chronicled complications.

A 50-million-gallons-per-year cellulosic ethanol plant would consume a truckload of biomass every 6 minutes, 24 hours per day, 365 days per year. The growth, harvest, collection, and transportation of that much cellulosic material would create land-use, logistical, water-use and greenhouse gas emission complications of huge proportions.

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Third-generation technologies, especially algae, are farther from commercial-scale production but will likely be in production by 2016 at unsubsidized economically-competitive costs and will revolutionize the biofuels industry if:
(1) They yield, as predictions suggest they can, 5,000-to-10,000 gallons of diesel per acre per year;
(2) they are grown, as predictions suggest they can be, on marginal, arid, otherwise useless land with brackish or salt water;
(3) they consume enough CO2 to reduce the higher costs for their growth and production and make them as carbon neutral as plants, as predictions suggest they will; and
(4) they do not compete, and predictions suggest they won’t, with human or animal food sources.

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The most crucial fact about the algal oils derived from algae is that they can be refined into vehicle gasoline, heavy vehicle diesel fuel or jet fuel. Most other AGRO- and biofuels have very limited applications and cannot be used to make heavy vehicle diesel fuel or jet fuel.

Other convenient facts about algae that will figure into their economic viability:
(1) By consuming CO2 to grow, they have the potential to add marginally to the cleaning of greenhouse gas-spewing facilities because they can be located at or near such places;
(2) after their algal oils are removed, algae retain supplementary economic value as nutritional and cosmetic supplements and animal feed, and other by-products have marketable potential; and
(3) while corn yields 350 gallons of ethanol/acre/year and soybean oil provides 50 gallons of biodiesel/acre/year, thereby taking up cropland and using enormous amounts of freshwater, algae can yield 5,000-to-10,000 gallons of diesel/acre/year on unused land with recycled water.

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By 2022, according to Kagan and Bradford, third-generation biofuels will be the world’s biggest biofuel source. By then, they could be producing 40 billion gallons of biofuels and meeting 37% the world’s liquid fuel needs.

The researchers calculate that transportation petroleum demand growth in emerging economies throughout the world will drive the worldwide consumption of gasoline, diesel, and jet fuel-like products from its 2009 level of 665 billion gallons to a 2022 consumption of 834 billion gallons. They expect biofuel production to provide 109 billion gallons of the 169 billion gallon increase and be 9.3% of the gasoline the world uses, 12.4% of the diesel used and 17.8% of all jet fuel used in 2022.

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QUOTES
- From Kagan and Bradford on Biofuels: “Oil is a problematic energy source for reasons other than volatile prices and diminishing supplies. In recent years, the consensus in the scientific community is that climate change is real and is driven largely by carbon emissions that stem from human behaviors. One response to the threat of climate change would be to regulate the use of carbon fossil fuels with an externality tax or some other policy measure. Taxing fossil fuels would drive up the price of petroleum products, making alternative fuels more economically attractive. Yet, can alternative fuels compete without policy initiatives?”

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- From Kagan and Bradford on Biofuels: “In the coming years, we believe the global biofuel industry will develop into a market measured in the hundreds of billions of dollars, and a major sector in the cleantech space. Though the near-term prospects of biofuel fi rms remain uncertain, the industry is full of potential and should be watched closely as its technologies and companies continue to evolve and emerge over the next few years.”